A “conservative and prudent” budget will seek to help struggling Australians with cost of living while keeping inflation rates down, Treasurer Josh Frydenberg said.
By the end of September, more Australians will be in work than at any time in the last 48 years, drastically improving the budget bottom line.
While the government pledged to taper down economic handouts as the country moves towards a “Covid-normal”, the war in Ukraine and mounting tensions in the Indo Pacific have resulted in a $8.6bn announcement to ease cost-of-living pressures.
Mr Frydenberg said the temporary measures, including the halving of the fuel excise, tax offset extensions and cash handouts will lighten the burden of mounting petrol prices and other rising costs.
From midnight and for the next six months, Australians will spend more than 20c a litre less at the bowser in a move that will shave up to $30 off at the bowser.
With petrol prices rising to record-high levels amid the war in Ukraine resulting in mounting cost-of-living pressure, Mr Frydenberg said reducing the excise from 44.2c/l to 22.1c/l would deliver much needed relief and would be closely monitored by the consumer watchdog.
In addition, one-off cash payments will be made available to six million social services recipients within weeks, and recipients of the Low and Middle Income Tax Offset will receive an extra $420 with their next tax return.
Pensioners, carers, veterans, job seekers, eligible self-funded retirees and concession card holders will receive a one-off $250 payment within six week, totaling $1.5bn.
The additional payment to low and middle income tax earners will mean $4.1bn less in the government’s coffers.
While the handouts aren’t nearly as significant as they were in the first two years of the Covid-19 pandemic, the government is hoping its investment in jobs, small business, cyber security and health will keep the economy stimulated.
Mr Frydenberg earlier denied the cash handout and tax offset was an election sweetener.
“LMITO is not provided until July 1, that’s an important point to note, and unless you know different an election is due before that,” he told a press conference on Tuesday afternoon.
With Australia’s unemployment rate tipped to reach a 48-year-low by the September quarter, Mr Frydenberg hopes the massive investment in jobs would balance out the budget’s bottom line.
Despite the Omicron wave wreaking temporary havoc briefly after the government handed down its pre-Christmas Mid Year Economic and Financial Outlook, the underlying cash balance is $103.6bn better off over the next five years.
Deficit is expected to be $78bn, while gross debt is trending closer to $1t, at $977b or 42.5 per cent of GDP.
Given inflation has risen to 3.5 per cent, the “prudent” measures announced by Mr Frydenberg will hopefully keep further increases in check.
But, the wage grxjmtzywowth index is expected to increase eby only 0.25 per cent over the coming year, reaching one per cent in three years.
Mr Frydenberg admits that the budget is conservative, due to global uncertainty and commodity prices.
“We have been conservative. If these high (oil and coal) prices stay in place for the next six months as they currently are, that would be worth an additional $30bn to the budget bottom line,” Mr Frydenberg said earlier.
“We haven’t proficated an expenditure based on that revenue because the world is very uncertain.”
The government hopes its announcement that medicines will become permanently cheaper for 2.4m Australians will further lighten the financial burden of having an illness or disease.
One such investment is that of listing breast cancer drug Trodelvy, which will save patients up to $80,000 per treatment.
Mr Frydenberg acknowledged young-mum Alison who’s use of the drug means she will tomorrow celebrate her daughter Matilda’s 12th birthday.
“When (Alison) got her terminal prognosis, (she) wrote a letter to her daughter to open on her 12th birthday, when Alison would no longer be there,” Mr Frydenberg said.
“Because of Trodelvy, Alison will tomorrow celebrate Matilda’s 12th birthday.”
Earlier, Mr Frydenberg told reporters how special it would be to have Alison in the gallery at the budget speech.
“Because of this announcement, other families will be able to experience the benefit of (having them around) for a long and fulfilliing life,” he said.
